• Natural catastrophes rank as the top risk in the engineering, construction, and real estate industry with 38% of responses.
• Fire, explosion is second with 31% of responses.
• Business interruption is third with 28% of responses.
• Businesses need to prioritize risk management and adopt proactive measures to protect their assets, employees, and reputation.

Johannesburg, South Africa - June 11, 2024 - The engineering, construction, and real estate sector is facing significant challenges in the year ahead, with Natural catastrophes and Fire, explosion risks emergingas the primary concerns, according to the Allianz Risk Barometer. It is followed by Business interruption (28%), Macroeconomic developments (21%) and Cyber incidents (19%). The report, based on insights from over 3,000 risk management professionals and business leaders, highlights the urgent need for proactive risk management and comprehensive disaster preparedness to ensure business continuity and safeguard against potential disruptions.

Natural catastrophes, including hurricanes, earthquakes, and floods, pose a major threat to the industry, causing damage to infrastructure, delaying construction projects, and disrupting real estate markets. With 38% of respondents identifying, it as the top risk, the sector must prioritize resilience by adhering to building codes, incorporating climate resilience considerations, and collaborating with stakeholders for effective disaster response planning.

Fire and explosion risks are another significant concern, particularly during the construction phase and in occupied buildings. The report reveals that 31% of respondents consider this risk a top priority. To mitigate these risks, the industry must focus on fire prevention measures, including adherence to standards, installation of detection systems, and collaboration with experts for emergency response planning.

Business interruption, resulting from project delays, supply chain disruptions, and regulatory challenges, is also a pressing issue for the sector, with 28% of respondents highlighting it as a major risk. To mitigate these risks, contingency planning and diversification of project portfolios are recommended, alongside leveraging technology for flexibility, and conducting thorough risk assessments.

Macroeconomic developments, such as economic downturns, inflation, and changes in interest rates, pose a threat to the industry, affecting project financing, demand for construction services, and property values. The report reveals that 21% of respondents consider this risk a top concern. To address these risks, the sector must stay vigilant and adapt to changing economic conditions, while also exploring opportunities for growth and diversification.

In an increasingly digital landscape, cyber incidents are becoming a growing concern for the engineering, construction, and real estate industry. With 19% of respondents identifying this risk as a top priority, robust cybersecurity measures, such as encryption and employee training, are essential to protect sensitive data and maintain operational continuity.

"Allianz Risk Barometer 2024 highlights the critical risks faced by the engineering, construction, and real estate sector," said Geoff Tanton, Head of Property and MidCorp at Allianz Commercial South Africa. "By implementing effective risk management strategies and disaster preparedness measures, businesses can enhance their resilience and ensure continuity in the face of various challenges."

The engineering, construction, and real estate sector plays a vital role in driving economic growth and development. As the industry faces an array of risks, it is crucial for businesses to prioritize risk management and adopt proactive measures to protect their assets, employees, and reputation.

View the Allianz Risk Barometer methodology and full global and country risk rankings

About the Allianz Risk Barometer

The Allianz Risk Barometer is an annual business risk ranking compiled by Allianz Group’s corporate insurer Allianz Commercial, together with other Allianz entities. It incorporates the views of 3,069 risk management experts in 92 countries and territories including CEOs, risk managers, brokers and insurance experts and is being published for the 13th time.

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